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23 May 2013
Quintain Estates and Development PLC (“Quintain” / “Company” / “Group”)
Results for the year ended 31 March 2013
Building Momentum Quintain, the London development and investment specialist, today announces its results for the year ended 31 March 2013.
Greenwich Peninsula Established new joint venture, securing funding for the 14 million sq ft development Works for 500 homes at Peninsula Riverside underway, kick-starting the next phase of
residential development Wembley
500,000 sq ft of new development delivered including the Hilton Hotel, with London’s first ever designer outlet on track to open later this year
Original 5.3 million sq ft planning consent enhanced, increasing future value for shareholders
Corporate Creation of sustainable new income streams from development management fees at
Greenwich Peninsula, the Grafton acquisition and expanded iQ portfolio. Strengthening of the balance sheet through £184 million of capital recycling On track to meet 2014 debt reduction target: now two thirds delivered
Financial Summary 2013 2012 Movement
Gross profit £25.6m £24.9m £0.7m Adjusted profit before tax £8.2m £5.8m £2.4m EPRA diluted earnings per share 1.8p 0.3p 1.5p Group net debt £444m £535m £(91)m Basic Net Asset Value per share 104p 110p (6)p EPRA diluted Net Asset Value per share 105p 116p (11)p
William Rucker, Chairman, said: “Significant progress has been made with re-positioning Quintain this year. We have delivered well against our financial objectives of reducing Group debt and creating sustainable new income streams, whilst improving the speed and quality of delivery at both Wembley and Greenwich Peninsula. The actions taken over the last 12 months have set the business on the right track to deliver sustainable returns and growth for shareholders.”
Max James, Chief Executive, said: “The pace of change built quickly at Quintain during the financial year, starting with the transformational deal that introduced Knight Dragon as our partner for Greenwich Peninsula, swiftly followed by the completion of 500,000 sq ft of new space in time for the Olympics at Wembley. Debt was reduced after £184 million was recycled over the year, which concluded with ground being broken for the first 500 homes at the Peninsula.
“2013/14 will be another year of action as we open the doors at London’s only designer outlet centre and seek detailed consent for the first homes at Wembley Park, while continuing to build financial strength. At a time of strong demand for new homes at price points that cater for London’s young professionals, Quintain is well placed to maximise value from one of the largest consented residential land banks in London.”
Meeting and conference call
A meeting for analysts and institutional investors will take place today at 11.00am at 8th floor, Tenter House, 45 Moorfields, London, EC2Y 9AE. The meeting can be accessed via a conference call dial in facility, using the following details:
Dial in number: +44 (0) 20 3059 8125
To ask a question: press * followed by 1 on the keypad
To remove your question: press * followed by 2 on the keypad
In addition, a live webcast of the presentation will be available on the Company’s website at www.quintain.co.uk.
Quintain Estates and Development PLC RLM Finsbury
Cressida Curtis Jenny Davey/Charlotte Whitley
Tel: +44 (0) 207 495 8968 Tel: +44 (0) 207 251 3801
Preliminary Report for the year ended 31 March 2013
3 Quintain Estates and Development PLC
Chief Executive Statement
Delivering on the Strategy In November 2012, I set out my vision to re-position Quintain as a leading London property developer and investor. The key objectives of the strategy are to:
focus the Company’s development activities on London; maximise and deliver the inherent value in Quintain’s unique development assets at Wembley and
Greenwich Peninsula; create and grow new and sustainable income streams; and reduce the Group’s net debt to below £400 million by 31 March 14.
Good progress towards each of these goals has been made during the year. At Greenwich Peninsula, the new joint venture is working well, increasing value and improving the quality and pace of development since it was established with shareholder support in July 2012. At Wembley, the opening of the 361-room Hilton hotel and 660-bed Apt student building, and the continued progress at the London Designer Outlet, has brought us close to completing the first 1.5 million sq ft of development. Combined with Wembley Stadium and Wembley Arena, we are establishing Wembley as an exciting, multi-faceted leisure and retail destination, ready for the next phase of residential development starting in 2014. New income streams have become established during the year following the acquisition of Grafton Advisors in February 2012 and on creation of the new joint venture at Greenwich Peninsula in July, both of which have increased the Group’s profitability. We have actively sought to reposition our portfolio and, principally through disposals, we have recycled £184 million of cash this year as we continue to strengthen our balance sheet. This programme has enabled the Group to reduce net debt whilst supporting continued investment in the London Designer Outlet.
Markets and Strategy The principal opportunity within Quintain lies in our two large London development assets and our ability to create exciting places for people to visit and live. Despite the challenges of the wider economic environment in the UK, London’s economic growth and broader fundamentals remain strong. The Capital continues to attract global financial and cultural interest and population growth, and last summer’s Olympics, in which we played a full part at both Wembley and Greenwich Peninsula, served to re-emphasise London’s qualities. As such, there is sustained and growing demand for new residential accommodation in locations with a strong sense of place and good transport infrastructure. Despite an anticipated increase in London residential development in response to this demand, it is forecast that there will remain a shortfall of approximately 115,000 homes over the next five years. With large parts of north and south London already mature, attention is increasingly focused on the ‘value corridors’ to the west and east of the Capital. Quintain is well placed to capitalise on these trends with outline consent already granted for 15,000 new homes across Wembley and Greenwich. Transport infrastructure is established at both schemes and each destination benefits from an iconic, globally-recognised entertainment venue that attracts millions of people a year. Our major developments are also well positioned to benefit further from the introduction of Government measures, announced in the March 2013 Budget, to support the development of rental properties and funding of mortgages for those seeking to buy a home.
Preliminary Report for the year ended 31 March 2013
4 Quintain Estates and Development PLC
Financial Results As expected, our results for the 2012/13 year reflect the changes we are making to the business to reposition the portfolio and establish a robust platform for the next phase of the Company’s development. We are already half way towards achieving the objectives of debt reduction and the creation of new income streams that were announced at our Interim Results in November. The progress being made will begin to manifest itself through improved financial strength with increasing profitability once the repositioning is complete. Adjusted pre-tax profit for the year increased by £2.4 million to £8.2 million, while net asset value per share reduced by 5% to 104p (2012: 110p), principally as a consequence of the on-going re-adjustment in secondary asset valuations.
a) Greenwich Peninsula
The transformational new 40:60 joint venture for the 14 million sq ft Greenwich Peninsula development was established in July 2012. The transaction confirmed the significant potential of the Peninsula, securing an initial investment of £170 million and the commitment to a further £300 million of revolving finance provided by our JV partner, Knight Dragon, the private investment vehicle of Dr Henry Cheng Kar-Shun. The new joint venture has added value to the scheme, securing a Committee resolution to approve the reduction and re-distribution of the affordable housing across the first 2,900 of the 10,000 homes for which we hold permission across the site. In line with our growing ambitions for the Peninsula, the team has now also re-designed the first phase of Peninsula Quays, where the premium residential product will be located, to create a more attractive and cohesive district, and the resulting plans were submitted for outline consent in March 2013.
At Wembley, the operational highlight of the year was the simultaneous completion of the new 660-bed Apt student accommodation building and the opening of the Hilton Hotel, which is located next to the National Stadium. The 361-bedroom hotel brings the first high quality four star accommodation to the area and sets the benchmark for the new Wembley leisure experience that we are creating. With our focus on reducing net debt, a 50% inte